February 11, 2011

States continue to pursue Amazon for sales taxes despite extra-aggressive defiance

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Amazon, the American Civil Liberties Union, and the state of North Carolina have ended their legal battles over privacy issues that came up when the Tarheel State’s Revenue Department requested sales info from the world’s largest online retailer as part of a campaign to make it collect sales taxes like other North Carolina retailers.

As an AP wire story reports, Amazon — which has spent millions in several states in a relentless campaign to avoid collecting sales taxes — had originally complained that North Carolina’s records request “would harm customers who may have bought controversial merchandise and could diminish future sales,” and got the ACLU to join in. But with yesterday’s action, North Carolina ended the case rather by simply “clarifying that demands for purchasers’ data don’t include the titles of the books and other products” and paying court fees.

A report in the Seattle Times by Amy Martinez, meanwhile, suggests that the privacy issue may have been an expensive delaying tactic taken by Amazon — Martinez notes that the state claims it didn’t request all the information Amazon sent it in the first place, including titles and names of products, and had immediately destroyed such information anyway.

The Revenue Department released a statement reiterating the point, notes the AP story:

This settlement only makes our position more clear to Amazon and other retailers that the department has no interest in the titles of books, movies, music or other expressive items. The lawsuit on this particular issue could have been avoided altogether if not for the aggressive stance Amazon took to avoid compliance with North Carolina’s tax laws. There would have never been an issue of customer privacy if Amazon would simply collect the North Carolina sales tax that others already do.

Martinez notes the statement added that charges that the case “has long been twisted into something it is not. Bottom line, this is about fairly collecting the tax that is due to the state of North Carolina and nothing more.”

Meanwhile, numerous websites calling this a “victory” for Amazon in its battle against collecting the same taxes required of other retailers seem to not be reading the entire report. As the Seattle Times story reports, the Revenue Department’s Beth Stevenson observed that the settlement “deals only with privacy issues raised in the lawsuit. It doesn’t affect North Carolina’s ability to investigate Amazon or any other Internet retailers for tax liabilities.”

Meanwhile, a report from the Dallas Morning News says that the state of Texas also continues to pursue Amazon for sales tax revenue — and in response Amazon has decided to fire all its employees in the state and close its warehouse facility there. “Texas wants $269 million from Seattle-based Amazon in past-due sales tax,” say reporters Eric Torbenson and Maria Halkias.

A statement from Amazon came with a peevish twist: “We were previously planning to build additional facilities and expand in Texas, bringing more than 1,000 new jobs and tens of millions of investment dollars to the state, and we regret the need to reverse course.”

The report doesn’t say how many people will actually lose their jobs.

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives

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